AT&T wants to buy Time/Warner. This makes business sense. AT&T’s telecommunications services are a commodity product vulnerable to price competition. In fact, a price war among wireless providers is raging right now, dragging down the stocks of these companies.
Management wants to transform AT&T into a content provider. AT&T would find it easier to attract and retain subscribers by bundling its telecom services with popular content. So it’s making moves to acquire content companies, with its proposed purchase of Time/Warner constituting the biggest deal of all.
But there’s a hitch: The merger of AT&T and Time/Warner requires DOJ approval.
Trump’s antitrust regulators are pressuring AT&T to divest CNN, a Time/Warner holding, as a condition of DOJ approval. Today we learned why: Rupert Murdock wants CNN. Think about what this means: CNN, one of Trump’s loudest media critics, will be merged with the Fox News organization, or at the very least run by a rightwing media baron, if Murdoch gets his hands on it. Goodbye CNN as we’ve known it.
But Murdoch can’t buy CNN if AT&T won’t sell it, and AT&T says CNN isn’t for sale. That’s where Trump’s DOJ jumps in. The message it’s sending to AT&T management is: Those who go along, get along. How bad do you want the rest of Time/Warner?
If you think this is because Trump and Sessions are worried about monopolies, you’re smoking something.